Last Week in Review:
June saw Housing Starts slump and Retail Sales jump.
U.S. homebuilders broke ground on fewer homes than expected in June, due in part to higher costs for lumber, lack of available land and a shortage of construction workers. June Housing Starts fell 12.3 percent from May to an annual rate of 1.173 million units. This was the lowest level since September 2017, as Housing Starts declined in all four major regions of the country. Starts were down 4.2 percent from June of last year.
Single-family starts, which make up the bulk of residential housing, fell 9.1 percent in June from May. Multi-family dwellings of five or more units plunged 20.2 percent month over month. Building Permits, a sign of future construction, also declined 2.2 percent from May to an annual rate of 1.273 million. June's figures were a disappointment given that a lack of inventory has been an ongoing challenge to homebuyers in many areas of the country.
Retail Sales went in the opposite direction in June, as they were up 0.5 percent from May, the Commerce Department reported. May's figure was also revised sharply higher to 1.3 percent from 0.8 percent. From June 2017 to June 2018, sales rose 6.6 percent.
The Retail Sales report is considered the most-timely indicator of broad consumer spending patterns. The key takeaway is that people spend more when they are less concerned about the economy and their employment. Strong Retail Sales typically signal a belief that the economy is doing well.
Mortgage Bonds continued to trade in a sideways pattern in recent days due in part to the mix of economic data. Home loan rates remain near historic lows.